Consequences of certain measurements

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In this video tutorial, accounting professor Kay Stice focuses on the consequences of certain measures or key performance indicators. By examining how business schools are ranked and how students are admitted, he explains that you have to carefully think through the unintended consequences, because you get what you measure.

- Recall the Soviet oil drilling contest,…which illustrated the important concept…that you get what you measure.…If you measure something then people will naturally focus…on that thing.…Well, let me illustrate this with an example of business…and law school rankings.…There are a number of rankings done by various publications…that identify the top business schools…and the top law schools.…I myself am proud to state that I have long been…a visiting faculty member…at the Kellogg–HKUST Executive MBA program,…which has been ranked number one in the world six times.…

These rankings are prominently featured…in recruiting brochures, communications with alumni,…and in press releases.…That is, they are prominently displayed if they're good,…but when a top business school or a top law school…falls out of the top 30…you suddenly find the school talking a lot more…about the quality of life,…the camaraderie among the students,…and the beauty of the local community.…In short, the school now talks about…anything but the rankings.…

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Released

8/4/2016

There's a critical link between an organization's goals and its performance metrics. A beautiful mission statement is nothing without specific, actionable measures that provide incentives to succeed. These actionable numeric measures are called key performance indicators (KPIs) and can be organized into a structure called the balanced scorecard. The scorecard helps you quantify business performance over time: weeks, months, quarters, or even years.

In this course, accounting professors Jim and Kay Stice explain what KPIs your business should consider in a balanced scorecard, from financial goals to employee and customer satisfaction. They describe how to craft a clear mission statement that complements your KPIs, and how to tie performance to incentives. Plus, get a look at KPIs in action, as Jim and Kay break down a case study examining a trucking company's balanced scorecard.